Hartford Accident & Indemnity Co. v. Natchez Inv. Co., Inc.

• Decision Date: 23 February 1931
• Docket Number: 28877
• Citation: 161 Miss. 198,132 So. 535
• Parties: HARTFORD ACCIDENT & INDEMNITY CO. v. NATCHEZ IN v. CO., INC., et al
• Court: Mississippi Supreme Court

132 So. 535

161 Miss. 198

HARTFORD ACCIDENT & INDEMNITY CO. v. NATCHEZ IN v. CO., INC., et al

No. 28877

Supreme Court of Mississippi

February 23, 1931

Division B

1. MECHANIC'S LIENS. Statute requiring provision in contractor's bond for payment of laborers and materialmen has effect of writing such conditions into bond, and contrary stipulations are ineffective (Laws 1918, chapter 128, section 3). Under section 3 of chapter 128, Laws of 1918, where a bond is given as provided for therein, the bond inures to the benefit of the materialmen who furnished material that went into the building. The statute has the effect of writing the conditions therein provided for into the bond, and no stipulations contrary to the statutory provisions will be permitted to have effect.

2. MECHANICS' LIENS. Stipulations may be written into contractor's bond affecting liability of surety company and contractor to owner or builder; surety on contractor's bond providing for payments to contractor from owner in cash or current funds held relieved from obligation to pay owner to extent notes taken by contractor without surety's consent interfered with contract stipulation (Laws 1918, chapter 128, section 3).

As between the contractor and the surety on his bond and the owner or builder, stipulations may be written into the bond which may affect the liability of the surety company and the contractor to the owner or builder, and where the surety contract provides for the payments to be made in cash or current funds, and the contractor and the owner, without the consent of the surety, provide for taking the note of the owner with a lien upon the property instead of cash, the surety company is relieved from the obligation to pay the owner to the extent that such notes and contracts may interfere with the contract stipulation.

3. MECHANICS' LIENS. Assignee of notes and lien given by owner to contractor could not recover on contractor's bond value of notes taken, where bond provided for payment to contractor in cash or current funds (Laws 1918, chapter 128 section 3). Where a contract of suretyship giving bond under section 3 of chapter 128, Laws of 1918, provides for payment in cash or current funds, and a person acquires a note from the owner with a lien to enforce the same on the building to be constructed, and the contractor assigns such note with the lien to another, the assignee has only the same rights that the contractor would have, and is not entitled to recover on the surety bond the value of the notes so taken. The section does not provide for the security of money borrowed by the contractor for the purpose of erecting a building, but only applies to the subcontractors and materialmen.

4. INTERPLEADER. In concursus proceedings to bring materialmen and subcontractors into courts to adjust claims under contractor's bond, court may allow reasonable fee to attorneys representing concursus proceedings; court in concursus proceedings to adjust claims of materialmen and subcontractors under contractor's bond may not allow attorneys' fees to materialmen and subcontractors for attorneys representing their separate interests (Laws 1918 chapter 128, section 3). Where a surety bond is given, as provided in section 3, chapter 128, Laws of 1918, and concursus proceedings, or proceedings in the nature of concursus proceedings, are instituted to bring the materlalmen and subcontractors into court for the adjustment of all claims, it is permissible for the court to allow a reasonable fee to the attorneys representing the concursus proceedings, but the court Is not authorized to allow attorneys' fees to materialmen and subcontractors for attorneys employed by them and representing their separate interests in the concursus proceeding.

5. MECHANICS' LIENS. Materialmen and subcontractors are entitled to interest as against surety on contractor's bond from maturity of demand for material or labor (Laws 1918, chapter 128, section 3).

Interest is allowable on bills for material and labor incurred, under the provisions of section 3, of chapter 128, Laws of 1918, as in other cases of contract, from the date of maturity of the demand for such material or labor.

ON SUGGESTION OF EBROR.

6. MECHANICS LIENS. Bond securing performance of building contract and providing for attorney's fee for instituting concursus proceeding held to cover such fee (Laws 1918 chapter 128, section 3). Where a surety company makes a bond for the faithful performance of a building contract by a contractor to the owner, and such contract provides for attorney's fees for instituting concursus proceedings, the bond will be held to recover such attorney's fees. 7. INTERPLEADER. Concursus proceeding under Louisiana law is equivalent of statutory proceedings interpleading materialmen in suit on contractor's building bond (Laws 1918, chapter 128, section 3). A concursus proceeding under the Louisiana law is the equivalent of a proceeding under chapter 128, Laws of 1918, interpleading materialmen in a suit on the contractor's building bond in favor of the owner as provided for in section 3 of said act. 8. MECHANICS' LIENS. Materialman having taken proceeding inconsistent with stipulations of building bond and accepted security for claim, held to have waived right to resort to bond, being relegated to security (Laws 1918, chapter 128, section 3). Although a materialman is protected under the contractor's bond made by a surety company guaranteeing the faithful performance ance of a contract and the payment of materials, yet such materialman is not entitled to recover from the surety if he has taken a proceeding inconsistent with the stipulations of the bond and has taken security from the owner for his claim. The statute does not prevent either waiver or estoppel in such case.

HON. R. W. CUTRER, Chancellor.

APPEAL from chancery court of Adams county, HON. R. W. CUTRER, Chancellor.

Suit by the Natchez Investment Company, Inc., against the Hartford Accident & Indemnity Company, wherein certain parties intervened and a cross-bill was filed. From the decree, the defendant named appeals. Affirmed in part, and reversed in part.

On suggestions of error filed on behalf of appellant and of certain appellees. Suggestions of error overruled. For opinion on suggestion of error, see 135 So. 497.

Affirmed. Suggestion of error overruled.

Wells, Jones, Wells & Lipscomb, of Jackson, Arthur G. Powell, of Atlanta, Ga., and Wallace Stevens, of Hartford, Conn., for appellant.

The materialmen cannot take the benefit of the bond and repudiate any of the conditions expressed in it. The surety signed the bond with the condition stated in the face of it, as a condition precedent to any liability under it, that there was to be no liability unless payments to the contractor were paid in cash. Neither the materialmen nor any one else can sue and recover on this bond with these conditions broken, without subjecting the surety to a liability it never assumed under the contract. Every obligation assumed by the surety under the bond whether in express language or by operation of law, was assumed subject to these conditions.

Pittsburg Plate Glass Co. v. Fidelity & Deposit Co., 193 N.C. 769, 138 S.E. 143; Alexander Lumber Co. v. Aetna Accident & Ind. Co., 296 Ill. 500, 129 N.E. 871.

The construction of chapter 128 of the Laws of 1918, as rendering the bond sued on in this case liable for the accounts of the intervenors is to make said law void and unconstitutional as interfering with the freedom of contract against property owners, contractors and surety companies in violation of section 1 of the Fourteenth Amendment to the Constitution of the United States.

Williams v. Fears, 179 U.S. 270, 21 S.Ct. 128; Standard Oil Company v. United States, 221 U.S. 1, 31 S.Ct. 502; Adkins v. Children's Hospital, 261 U.S. 525, 43 S.Ct. 394; Allgeyer v. Louisiana, 165 U.S. 578, 17 S.Ct. 427.

Williamson Greer Company granted an extension of time to the Natchez Investment Company, Inc., for the payment of part of the contract price without the consent of the surety. The account was novated and the contract bond released of any liability therefor.

Interest is not allowable on claims made by materialmen against the contractor's bond.

McElwrath and Rogers v. Kimmons et al., 112 So. 164.

The recovery on the bond is a recovery of the penalty named in the bond and penalties do not bear interest until judgment, therefore, neither are they to be enlarged by judicial construction but are to be strictly construed.

This court has repeatedly given a strict construction to contracts for attorney's fees and has gone to the extent of denying the right to recover attorney's fees in certain cases where the contracts provided for them.

Middleton v. Zachary, 101 So. 588; Forman v. McFarland, 87 So. 275.

Chapter 128, Laws of 1918, does not permit the recovery of attorney's fees, the recovery is based solely on Article 30 of the general contract. That article, however, provides for a reasonable attorney's fee only for the enforcement of the contract between the owner, the Natchez Investment Company, and the contractors and the suit instituted by the Natchez Investment Company in this case is not such a suit.

Attorney's fees were not reasonable in this suit.

Mississippi Fire Ins. Co. v. Evans, 120 So. 730.

The allowance of five thousand dollars even if a fee is allowable is an abuse of discretion, wholly and utterly unsupported either by reason, the evidence in the case, equity or justice.

Wells, Jones, Wells & Lipscomb, of Jackson, for appellant.

No fees can be allowed to any one in any case unless, first, that person recovers in the cause which he institutes, or unless he pays into court a fund to protect himself...